Analyse the Different Ways in Which Countries Can Attempt to Overcome the ‘Basic Economic Problem’.

2042 WordsNov 22, 20129 Pages
Firstly, the economic problem is split into three questions, which are: what to produce? How to produce? Who to produce for? These three questions can also be summed up as scarcity which is the inadequate amount of resources available. Consumers have wants which are unlimited; they would always want more, but due to the economic problem, scarcity, not everyone will get there ‘want’ fulfilled, therefore causing a problem. Different countries can attempt to overcome the economic problem in several ways; which is to apply a different economy system to their country. Due to scarcity consumers will now have to make a choice of what they want, by sacrificing the next best alternative when making a decision, this is known as opportunity cost.…show more content…
Example of good entrepreneur is Steve Jobs who was all behind the creation of Apple and the success of it. Factors of production causes scarcity which in turns leads to people making choices due to the economy problem in the country; however countries do follow economy system to try and overcome these problems. These are: free market economy; mixed economy and command economy. All three handle with basic economic problem differently and are applied in many different countries. Free market economy is an economy system which is controlled by supply and demand and has very little or non-government influence. Hong Kong has been one of the freest market economy countries in the world. “This year, however, several government moves have sparked renewed debate as to whether Hong Kong is abandoning its laissez-faire principles.” Cathy Yan. (2010). Face Off: Is Hong Kong Still a Free Market?. Available: http://blogs.wsj.com/hong-kong/2010/12/20/is-hong-kong-still-a-free-market/. Last accessed 26th October 2012 Some of the characteristics of the free market economy are that everyone is out there to make gains and maximise on them gains. The firms will maximise profit and consumers would have gained a good or service that they wanted. Majority of country’s factor of production, land, are owned by a third party. They will be the private owner of

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